US trade deficit grew to 3-year high in January

By MARTIN CRUTSINGER, AP Economics Writer
| 10:22 a.m.March 9, 2012

In this Dec. 8, 2011 photo, a container ship is docked at the Port of Oakland in Oakland, Calif. The U.S. trade deficit surged to the widest imbalance in more than three years in January as imports hit an all-time high, reflecting big demand for foreign-made cars, computers and food products, according to reports Friday, March 9, 2012. (AP Photo/Paul Sakuma)
— AP

In this Dec. 8, 2011 photo, a container ship is docked at the Port of Oakland in Oakland, Calif. The U.S. trade deficit surged to the widest imbalance in more than three years in January as imports hit an all-time high, reflecting big demand for foreign-made cars, computers and food products, according to reports Friday, March 9, 2012. (AP Photo/Paul Sakuma)
/ AP

In this Jan. 17, 2012 photo, the container ship CMA CGM Georgia, sails into Charleston Harbor, in Charleston, S.C. The U.S. trade deficit surged to the widest imbalance in more than three years in January as imports hit an all-time high, reflecting big demand for foreign-made cars, computers and food products, according to reports Friday, March 9, 2012. (AP Photo/Matt Rourke)— AP

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In this Jan. 17, 2012 photo, the container ship CMA CGM Georgia, sails into Charleston Harbor, in Charleston, S.C. The U.S. trade deficit surged to the widest imbalance in more than three years in January as imports hit an all-time high, reflecting big demand for foreign-made cars, computers and food products, according to reports Friday, March 9, 2012. (AP Photo/Matt Rourke)
/ AP

WASHINGTON 
The U.S. trade deficit surged in January to the widest imbalance in more than three years after imports grew faster than exports.

Rising oil prices helped drive imports to a record high, as did stronger demand for foreign-made cars, computers and food products.

And exports to Europe fell, a sign that the region's debt crisis could temporarily weaken U.S. growth just as the job market is strengthening.

The January trade deficit widened to $52.6 billion, the Commerce Department reported Friday. That's up from a revised $50.4 billion in December and the biggest gap since October 2008.

Imports rose 2.1 percent to a record $233.4 billion. Exports were up a smaller 1.4 percent to $180.8 billion. Exports to Europe fell 7.5 percent.

"There is little good news in January's trade figures," said Paul Dales, senior U.S. economist at Capital Economics.

Dales blamed much of the increase on higher oil prices, which drove oil imports up 3.3 percent. Nonetheless, he said the wider deficit is likely to slow economic growth in the January-March quarter to an annual rate of 1 percent.

Growth should improve later in the year, he said, because a surge in hiring that is likely to boost consumer spending.

The Labor Department reported Friday that U.S. employers added 227,000 jobs in February to complete three of the best months of hiring since the recession ended. Since the beginning of December, the country has added 734,000 jobs.

A separate Commerce report showed that wholesale companies kept building their stockpiles in January. Sales, however, dipped for the first time since May.

Business restocking was a major driver of economic growth at the end of last year. Economists say that's likely to slow in the first quarter, another reason they are expecting weaker growth.

A wider trade deficit weighs on growth because it means Americans are spending more on foreign-made goods than overseas consumers are spending on U.S.-made goods.

Economists predict the trade deficit this year will widen from last year's $560 billion imbalance. A key reason is they expect U.S. companies to sell fewer goods in Europe, which represents about 20 percent of America's export market.

"While the U.S. economy is picking up steam, the rest of the world is not. So, we are importing a lot more," said Joel Naroff, chief economist for Naroff Economic Advisors.

U.S. consumers drove the deficit higher buying more foreign cars. Imports of autos and auto parts rose 10.4 percent to an all-time high of $25.3 billion.

Imports of capital goods, such as computers and industrial machinery, also hit a record at $44.7 billion. And imports of food products hit a record high of $9.6 billion. Demand for foreign-produced fish, meat, bakery products and wine and beer all rose.

The increase in exports reflected records in several categories. Exports of U.S.-made cars and auto parts increased to record $12.7 billion. Exports of U.S.-made capital goods climbed to a record $43.2 billion.

The deficit with China is also growing. In January, it jumped 12.5 percent to $26 billion. Last year, the deficit with China hit a record $295.5 billion, the highest deficit ever recorded with a single country.

With millions of Americans unemployed, political pressure is growing in the U.S. to impose economic sanctions on China. Critics say China has undervalued its currency against the dollar. That has made Chinese goods cheaper in the U.S. and American products more expensive in China.